25 Impressive & Crazy Debt Statistics

The national debt epidemic is becoming a major concern in the United States, both for consumers and government agencies. Although the United States is beginning to recover from the recession that began in 2007, economic projections for the future are disconcerting. We have compiled 25 crazy consumer debt statistics that best illustrate America’s dire financial situation. With the proper knowledge and education, you are better equipped to face an unstable economy with confidence and wisdom.

The combined amount of both public debt and intra-governmental holdings is over $17 trillion as of April 2014. The national public debt reached $12 trillion in October 2013 and has continued to increase. Unfortunately, the total American consumer debt is almost as much as the country’s public debt.

After combining the total amount of debt for each individual, American consumers owe a total of $11.68 trillion as of April 2014. The most common debts are credit cards, mortgages and student loans. Americans owe an estimated total of $8 trillion in mortgage loans and $854 billion in credit card debt.

According to a report released by GoBankingRates, the average American individual owes over $225,000 in debt. This includes all types of debt such as mortgage loans, auto loans, student loans and credit card debt. The report also states that only 59% of Americans have at least $500 in an emergency savings account.

Over three-fourths of citizens living in the United States do not have enough money in their emergency savings account to cover at least 6 months of expenses. According to one survey which gathered data from 1,000 adults, 50% had less than 3 months of expenses in their savings and 27% of those surveyed had no savings at all.

American consumers score an average credit score of 692. Most credit scores fall somewhere between 600 and 750. Typically, people try to aim for a score of 700 or better as this indicates good credit management. Unfortunately, only 58% of Americans have a credit score higher than 700.

More than half of adults in the United States are unaware of their credit score. A lot of people simply ignore their credit score until they try to take out loans for a new home or automobile. Many Americans report that they know their credit score, but don’t know exactly what it means. A low credit score limits your options and can even ruin job opportunities.

After the Great Recession that rocked the country’s foundation, many Americans reached for minimum wage jobs and were grateful to have employment at all. This number shows a 50% increase from a decade ago. Even older adults and college graduates are affected by this. People making minimum wage have a much harder time paying off debt.

It is not hard to understand that people with lofty incomes are more comfortable taking on financing plans and credit card debt. Interestingly, recent surveys show people who make less than $35,000 annually were able to reduce their debt by 30% from 2008 to 2012. On the other hand, people who make more than $50,000 annually only reduced their debt by about 23%.

Consumers are borrowing more money to obtain new automobiles, which forces many people to extend their loan over 6 or 7 years. The overall average auto loan lasts for about 5 years and 3 months. However, this average is expected to rise. With the introduction of new technologies and enhanced car features, the price of a new car is likely to escalate in the near future.

Credit card debt is on the rise, and many people are facing a large debt which they are unable to immediately pay off. Making minimum payments on large debts inevitably accrues hefty interest rates. USA Today reports that 39% of credit card holders rely on credit cards to cover important expenses such as medical bills.

The first 3 months of 2014 yielded shocking news for credit card holders when the national average interest rate rose to 21%. This shows an increase of more than 2% from the previous year. Some financial experts speculate that credit card companies are attempting to increase profit margins by hooking new customers with low introductory interest rates.

Credit cards make it easy to overspend because you are not taking any money from a checking or savings account. However, credit cards actually hike up the price of your initial purchase. Not only must you pay interest rates and any fees that may arise, but companies must also pay fees to process your credit card transactions.

Credit card debt reached $900 billion in 2006 and has continued to fluctuate as the United States struggled to survive the recession. In 2008, credit card debt peaked at $1.005 trillion. It began to decline again for a few years until 2012 when it reached $845 billion. In 2010, the average family spent 14.2% of their income towards paying off credit card debt.

Although this number varies depending on state and region, the average American owes an estimated $150,000 in mortgage debt. For most people, this is the biggest debt they owe. Mortgage debt is usually considered “good” debt as houses appreciate in value. However, many people are having trouble making mortgage payments due to lack of income.

Some states have a more severe mortgage problem than others. California, Hawaii and Maryland are ranked the top 3 states that have the worst mortgage debts. California in particular has suffered greatly as home value has dropped by about 30%. 1 out of every 252 homes was lost to foreclosure in December 2011.

According to one report, students who graduated in the class of 2012 owed an average of $29,000 by the time they earned a degree. This shows an increase from 2011 when the average student graduated with a debt of $26,000. As college tuition prices continue to rise, the average student loan debt is expected to increase at an almost steady rate.

Many students once relied on grants and financial aid to attend school without accruing a large debt. Unfortunately, financial aid is being spread thin as college tuition is steadily increasing. People who recieve grants are still forced to take out loans to cover tuition costs. Temporarily defering a student loan can raise the outstanding balance by 6%-7%.

More and more people are questioning their decision to pursue a degree. Many college graduates are underemployed and earn a low wage that does not cover monthly student loan payments. 15% of taxi drivers in 2010 possessed a bachelor’s degree or higher. In 1970, only 1% of taxi drivers were college-educated.

A record number of adults between the ages of 18-31 have moved back with their parents or still haven’t left home at all. This accounts for 36% of the young adult population, which is the highest percent in at least 4 decades. Many of these people are college graduates who cannot afford to pay back student loans and cover rent at the same time.

In 2013, approximately 20% of Americans age 65 and younger dealt with medical bills they could not afford to pay. Many of these people had full insurance coverage. The people with the highest debts were individuals facing serious illnesses such as cancer. Even with insurance coverage, the out-of-pocket expenses can create a significant gouge in personal finances.

Medical debt has been a serious issue for a long time. President Obama has made an attempt to correct the problem by providing mandated universal health insurance that hopefully protects patients from unmanageable debt. The results of this healthcare system are yet to be proven, and at least 10 million Americans are still expected to deal with medical debt.

Most people think bankruptcy is caused by uncontrolled credit card debt or unpaid mortgage loans. While these types of debt play a huge factor, unpaid medical bills have become the biggest reason for filing bankruptcy. Adults between the ages of 35-44 are suffering the most and account for 28.9% of bankruptcies filed in 2013.

The United States has witnessed a decline in marriage rates that is now reaching a historic low point. In 2011, the national marriage rate was approximately 51% as opposed to 72% in 1960. While certain political and societal issues affect this, many young couples feel financially unprepared and delay tying the knot. This has led to an increase in unmarried cohabitation.

Since the beginning of the recession, household incomes have experienced significant fluctuations. Household incomes began to rise in 2011, but these increases have been hard to sustain and dropped again in 2012. Unemployment is the biggest factor hindering full recovery. In addition, many mid-wage jobs that were lost are now being replaced with low-wage jobs.

In March 2014, the IRS waited for taxpayers to claim more than $760 million from the 2010 tax season. This money supposedly belonged to 918,600 taxpayers who didn’t file taxes even though they were eligible for a tax refund. Money that was unclaimed before the deadline became property of the U.S. Treasury Department and can no longer be collected.

Takes your existing debt and try to settle with your creditors for a lower amount.
If you pay off the settled amount, your debt will be considered paid in full.

Negotiates with your creditors on your behalf.

Fee based on a percentage of your total starting debt or a percentage of the debt they save you.

Most settlement companies have you create a separate "escrow" account where you will make monthly
contributions over a certain amount of time to contribute to your settlement. Once there is a
substantial amount of funds to show your creditors, the settlement company will try to negotiate
a lower amount of debt.

Combines all your debts and creditors into one monthly payment.

Allows you to pay one monthly payment to the consolidation company,
instead of multiple payments to different creditors.

You no longer owe your original creditors; instead you pay one monthly
payment to your consolidation company.

Consolidation companies can help negotiate lower interest rates on your
debts and help lower your total debt payment in the long run. A lower
interest rate will lower the amount you owe in the end.

Allows you to consolidate all your different debts into one personal loan that can be paid off over time.

Can offer borrowers a lower
interest rate with a longer payback term (compared to high-interest credit cards or medical bills). This will lower the amount of money required to pay off the loan over time.